Many people can get the 90 LAV loans on investment properties therefore many investors are financing or refinancing their properties at higher percentage values than normal. Many are taking cash out at the closing and many are choosing to pay near retail value for real estate, homes, land and/or properties that are eligible for this type of financing, on the theory that a no money down deal is a good deal, even if it only cash flows a little. Wise investors avoid this (and the strong "sales pitches" by mortgage brokers) thus fair much better.
I just wanted to say that first because an few folks that start in real estate investing fall victim to that very circumstance and loose in the investment. You frequently hear about people who made their fortunes investing in the stock market, but you also hear about investors who lost their shirts. You hardly ever hear about real-estate investors who go bankrupt. It does happen, but not very often. Where there is property involved, there is always "worth" there. Many times creative financing can be the way out of the property.
Many individuals who started in real estate investing long ago are living a very comfortable lifestyle. Investing in real estate can garner interesting returns, so if you're just getting started or have considered investing in real estate, the information that follows is invaluable. All too often, real estate investing and real estate "flipping" remains a well-kept secret. Otherwise, everyone would do it, right? But remember, investing in real estate requires entrepreneurial skills and action taken consistently. Real estate "work" requires a lot of time. You also have to deal with operating and repair expenses. Which brings us to the main item: cash flow....Cash flow is the difference between your income and your expenses on a particular building or property. It may be positive or negative in nature. Without doubt, you'll be much better off if the cash flow is positive.
Two things to keep in mind (and study)...
1. In real estate investing appreciation is the increase in value over time. There are two kinds of appreciation. Economic conditions beyond your control, such as inflation, determine part of the appreciation. The gain is small from this type of appreciation since the gain is offset by the higher cost of living. Another part of appreciation is "market appreciation", which you have all of the control over this part. As you improve a property, you force its value higher. You can purchase a piece of property in major or minor need of repairs and return it to neighborhood standards or slightly higher. This will give you a property that is much higher in value.
2. Leverage is the ability to borrow a percentage of the value of a piece of property. Real estate, usually, offers a great degree of leverage. We suggest studying "creative financing", which can be very detailed indeed. Also keep in mind that there are many tax advantages that can be utilized through real estate investing.
Thomas Edison failed over 10,000 times when inventing the first light bulb. When asked about that he said, "Those were successes not failures. We found 10,000 excellent ways to not make a light bulb." Failure is one step closer to success.
Mike Dodd has studied for years in the field of real estate investing.
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